Too Big to Fail, Too Slow to Save
Thames Water’s problems were hiding in plain sight, from outdated pipes spilling sewage into the river, to growing financial pressures behind the scenes. Yet for years, these issues were overlooked. When the crisis finally hit it looked sudden, but the warning signs had been ignored for years.
On the surface, Thames Water, Britain’s largest water utility, appeared as steady as the flow of the river it’s named after. Millions of Londoners turned on their taps each day with no hint of trouble. Yet by the middle of 2025, this company, generating over £2 billion in annual revenue, was teetering on the brink of failure. A debt pile of £17 billion, years of underinvestment in ageing pipes, and mounting fines for sewage pollution had pushed Thames Water into a full-blown crisis behind the scenes. The alarm bells were loud by the time the public heard them. A £1.65 billion annual loss, emergency talks with regulators, and the government scrambling to avert a collapse that would have forced a temporary nationalisation. It turns out that too big to fail can also mean too slow to save. The company’s problems had been building for decades, while leadership and regulators only woke up at the eleventh hour.
The question I had was, how does such a colossal organisation reach this point? In Thames Water’s case, there was a pervasive false confidence that things were under control. Internally, however, governance was fragmented and decisive action perpetually deferred. The company cycled through five CEOs in five years, chasing short-term fixes. It even amassed an army of external advisors in a bid to fix the plane while flying it, racking up £159 million in advisor fees during a frantic restructuring attempt. Despite all that expert help, Thames Water’s leadership lacked clear direction and timely decisions. This fragmented response burned cash without restoring stability. By the middle of 2025, a panicked regulatory reset was on the table (including talk of scrapping Ofwat, the regulator, for its oversight failures). In short, what looked like a stable utility was in fact slowly eroding from within.
Thames Water is not an isolated case. UK corporate history offers painful examples of seemingly resilient institutions unravelling due to slow, weak governance responses. There is a pattern to be identified in each. Warnings were ignored, governance and oversight were complacent, and then a sudden collapse seemingly out of nowhere. Let’s look at three case studies that underscore this dynamic, and draw lessons for leaders of mid-tier organisations intent on avoiding the same fate.
Carillion
A Collapse Years in the Making.
Carillion plc was a construction and outsourcing giant that, for years, seemed unshakeable. It built hospitals, managed military bases, and was entrusted with landmark projects like High Speed 2. But behind the scenes, Carillion was a house of cards. Aggressive accounting masked huge debts, and internal reports of cashflow issues were glossed over by a management team described by MPs as “misguidedly self-assured”.
The company issued profit warnings in 2017. Even then, confidence in Carillion remained so high that the government kept awarding it major contracts (astonishingly, HS2 signed off £1.3 billion in new deals with Carillion 21 days after a profit warning). This false optimism only dug the hole deeper. By January 2018, Carillion collapsed under £7 billion of debt, in the UK’s biggest corporate failure in decades.
The fallout was massive. Over 3,000 direct jobs gone and 75,000 jobs in its supply chain affected, 450 public projects stalled or costlier to complete, and the taxpayer forced to pick up at least £150 million in losses. A subsequent inquiry laid the blame on a governance vacuum. Carillion’s board had chased dividends and executive bonuses even as the firm edged toward insolvency. In other words, leadership clung to an illusion of stability (and personal reward) instead of confronting the very real cracks in the business. Carillion’s collapse was a slow-motion train wreck that many saw coming, but no one acted to prevent.
HS2
High Speed, Low Oversight.
The High Speed 2 rail project (HS2) is a national endeavour, not a private corporation, yet it exemplifies similar pitfalls of decision paralysis and oversight failure. Launched in 2012 with grand promises of transforming UK transport, HS2 was sold as too important to falter. But as years passed, costs ballooned and leadership churned, while officials kept insisting all was well, until reality intervened.
In 2023, after spending billions, the government cancelled the entire Manchester leg of the line, effectively abandoning half the project. By the middle of 2025, the remaining London to Birmingham section was delayed far beyond the original 2033 deadline. A railway once budgeted at £33 billion is now estimated to cost over £100 billion for a vastly scaled-down vision. Britain’s transport minister summed up the debacle as the result of “years of mismanagement, flawed reporting and ineffective oversight”.
In other words, HS2’s leaders and advisors for too long indulged in optimistic forecasts and complex plans without frank reality checks. The project became too big to question, until spiralling costs and delays made questioning it unavoidable. Just like a private firm, a mega project can suffer from groupthink and inertia. Bad news was swept under the rug, and tough decisions kicked down the road. HS2’s painful reset in 2025 (delivering only a portion of the original plan, at triple the cost) stands as a cautionary tale that big initiatives can fail slowly and expensively when governance loses its grip on reality.
Post Office Horizon
High Speed, Low Oversight.
Not all crises are about financial collapse; some are about a catastrophic governance failure that damages lives. The Post Office’s Horizon IT scandal is a prime example. Here was a venerable British institution that outwardly ran as expected (letters delivered, post offices open) while internally, an unchecked software error wrecked careers and changed lives.
In the 2000s, the Post Office installed the Horizon computer system and refused to believe it could be flawed. When Horizon showed accounting shortfalls at local branches, management assumed sub-postmasters were stealing. Over 700 sub postmasters were prosecuted by the Post Office itself, and nearly 300 more by government agencies, for crimes they didn’t actually commit. People lost their businesses, went bankrupt, and even went to prison. Some died by suicide. All because the organisation’s governance was in denial.
Evidence of software bugs began emerging as early as 2009, and by 2013, an independent report flagged serious faults. The Post Office’s response was to bury the report and shut down the inquiry program, determined to protect Horizon’s reputation rather than innocent employees. It took until 2019 for a court to force the truth into the open. Judges quashed convictions en masse and condemned the Post Office’s “institutional obstinacy.” A member of Parliament later called it “one of the UK’s worst ever miscarriages of justice”.
The financial cost of this slow-motion scandal is also staggering. The government has allocated £1.7 billion for compensation and legal redress, and as of the middle of 2025 over £1 billion has already been paid to thousands of victims. The Horizon case shows how internal systems and culture can quietly undermine an organisation’s integrity. For years, the Post Office’s leadership maintained an aura of stability and infallibility, all the while committing grave injustices because it delayed admitting something was wrong. The myth of stability in this case was the belief that the system was solid, and people must be at fault, a myth that shattered only after irreparable harm was done.
The Cost of Delay and Denial
Looking across these cases (Thames Water, Carillion, HS2, Post Office) a common theme emerges. Big crises are often decades in the making. Major organisations rarely explode overnight. They erode from within while everyone carries on as if all is fine. Governance failures, cultural complacency, and decision paralysis allow problems to snowball. Warning signs get rationalised away. Leaders grow deaf to bad news or are overwhelmed by complexity. Advisors multiply, meetings drag on, but decisive action comes too late. In Carillion’s case, the government and board lacked the decisiveness or bravery to intervene despite clear red flags. At Thames Water, every extra day of hesitation in tackling the balance sheet and sewage issues only worsened the eventual crunch. As one union leader starkly put it, “in all these cases apparently healthy companies suddenly experienced financial problems and in several cases collapsed”. The collapse feels sudden only because leadership’s response was so slow.
Often, the reason leaders delay action is classic decision paralysis. When a crisis brews, boards and executives can freeze up, especially if they’re getting fragmented advice from all corners. We’ve seen it time and again. Multiple fires raging at once, and a bombardment of conflicting opinions leaves the top team paralysed just when swift decisions are most critical.
In crises, doing nothing is the worst option, but it’s an easy trap to fall into when every choice seems dire. Additionally, big organisations tend to rely on complex advisory models and utilise separate consultants for finance, legal, PR, and operations, each guarding their silo.
The result is a lot of talk and paper, but little unified action. In fact, in our Arx Nova analysis of Thames Water’s near collapse, we noted that the company’s fragmented approach to crisis management (with scores of advisors and law firms) led to confusion, delays, and exorbitant costs. A patchwork of siloed advice can burden a leadership team to the point of paralysis, with every consultant waiting on the others, no single plan, and the clock ticking. Precious weeks or months are lost while a coherent response lags. By the time clear action is taken, the organisation may already be past the point of straightforward rescue.
Delay is deadly for leaders in a crisis. Whether it’s a financial meltdown, a massive project overrun, or a brewing internal scandal, choosing not to choose is an illusion. The crisis is still evolving, just without your guidance. As we explored in our recent Arx Nova insight “Decision Paralysis in a Corporate Crisis: How to Avoid the Leadership Trap”, hesitation and disjointed counsel can doom a company in turmoil.
Every hour of dithering means mounting losses, regulatory penalties, and reputational damage. Put simply, time is the one thing you can’t afford to waste in a crisis.
Staying Ahead of the Crisis: Lessons for Mid-Tier Firms
It’s easy to see these stories as “big company problems”. But mid-tier businesses (£1m–£100m turnover) face many of the same risks, sometimes with even less cushion. In fact, small to medium-sized firms can fail even faster because a single blow (a lost contract, a cashflow gap, a PR scandal) can be fatal if not swiftly managed. The good news is that the warning signs are often there in advance, if you know where to look. Here are some practical lessons mid-tier organisations can draw from these crises:
Governance with Eyes Wide Open
Don’t wait for regulators to spot your problems. Build an internal governance culture that surfaces bad news early. This is about real-time clarity (at Arx Nova we rail against unnecessary bureaucracy). Ensure your board gets candid reports on operational hiccups, financial anomalies, and compliance risks. Create channels where employees can flag issues without fear. Healthy governance means having the true state of the business at your fingertips, not relying on unrealistic summaries. Governance done well should inform action, not impede it.
Early Intervention Beats Emergency Reaction
If something feels off, investigate now, not later. A small cashflow strain can become insolvency in six months; a minor IT glitch can spiral into a full system outage. Many crises, from Carillion’s debts to the Post Office’s software bug, could have been mitigated by early intervention. Empower your team to act on early warning signs. It’s far easier to correct course in a business when the problems are still manageable. This may mean bringing in external help pre-emptively. (At Arx Nova, we offer both governance structure build-outs and pre-transformation diagnostics for clients; essentially a comprehensive health check that stress tests financial, operational, legal, PR/ Marketing and governance fundamentals to spot cracks before they widen.)
Cash Discipline is Non-Negotiable
Cash is the lifeblood of any business, mid-sized or not. Carillion taught us that rapid growth and big revenues mean nothing if the underlying cash flow is brittle. Mid-tier firms must maintain robust cash buffers and strict working capital oversight. Avoid the trap of over-leverage (too much debt) and optimistic forecasting. Run scenarios for worst-case liquidity needs. It’s a lot easier to survive a crisis, or better yet, avoid one, when you have the cash to weather surprises. Make sure your finance team isn’t just counting the profits, but monitoring the cash conversion and debt covenants monthly.
Operational Clarity and Simplicity
Complexity can sometimes be the enemy of action. Many mid-sized companies suffer from convoluted processes, unclear accountability, and too many layers for information to travel through. Strive for operational clarity. Map out your critical processes (order fulfilment, incident response, etc.) and ensure it’s always obvious who is responsible for what. Eliminate silos wherever possible. The faster information and decisions flow in your organisation, the harder it is for a crisis to catch you off guard. If a serious issue does erupt, a clear chain of command and a simple playbook will outperform a complex, consultant-heavy approach every time.
Finally, consider how you would handle a worst-case scenario. Do you have a crisis plan? Who would run point if the CEO were under fire and your systems went down simultaneously? Mid-tier firms rarely have dedicated crisis management teams on staff, which is why many are now seeking outside partners for that “break glass in case of emergency” moment. For example, integrated crisis management services (like the model we use at Arx Nova) can parachute in a seasoned team within 24 hours to stabilise a situation. The key is that when something goes wrong, you don’t lose days assembling advisors and guessing at a strategy. The plan is ready to go.
In essence, proactive leadership is about tackling the small fires before they get out of control. It’s about having the humility to admit vulnerabilities while they can still be fixed, rather than assuming your organisation is invincible. Remember that apparent stability is often just an overlay on underlying fragility. The Thames Waters and Carillions of the world show that even industry leaders can ignore reality until it nearly sinks them.
As a leader, you have a choice. Embrace the hard truths and act early, or put faith in the comforting myths until fate forces your hand. The latter is far more expensive.
Think about any signs of silent instability that are hiding inside your organisation. The time to seek them out and address them is now, before they trigger a crisis. The best time to fix the roof is when the sun is shining. The storm clouds may not be visible yet, but prudent leaders will be on that roof today, strengthening every shingle. Your organisation’s future might depend on it.
Who’s behind this post?
Joseph Mawdsley
Director & Co-Founder
Joseph Mawdsley is a senior project leader and governance specialist, and Co-Founder of Arx Nova. With extensive experience guiding complex organisations through change, Joseph focuses on operational control, strategic planning, and delivery under pressure. He helps businesses stabilise fast and move forward with structure and clarity.
